You’ve received a tax refund. Congratulations! But before you grab your wallet for a whirlwind shopping spree, take a minute to really think about where your money would best be spent. You can start by considering these key questions:
How Big Are My Savings?
Most financial advisors agree that it’s a smart idea to have at least three months’ worth of living expenses in your savings ac¬count–so if your account is looking a little bare, put your tax refund straight into savings.
What Are My Financial Goals?
Not all savings accounts are the same, so if you do choose to save your tax refund, think carefully about where you’re put¬ting it.
The Credit Union, for example, offers a range of savings accounts to choose from, including certificates which are a low-risk saving option, perfect if you don’t need to tap into it for a period of time, and money market accounts which offer higher rates for maintaining a higher balance.
Do I Have Debt?
Any time you have extra cash in hand is a good time to think about paying down your debt, whether that be from a credit card or student loan.
Find a debt repayment strategy that works best for you, but it is recommended to start with high-interest payments that will accrue more debt over time.
Is It A Good Time To Invest?
If you have some debt but also want to in¬vest for the future, look into debt consolidation tools that give you more freedom to invest your tax refund. From balance transfers to a more consumer-friendly credit card, to auto loan refinancing that could lower your monthly car payments, consolidation of debt can give you the flexibility to use your tax refund else¬where.
